HADOTI KSHETRIYA GRAMIN BANK, AJMER V. DEPUTY COMMISSIONER OF INCOME TAX, AJMER

ITA 273/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3684 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA
• Assessee Lawyers: AJAY SOMANI
• Keywords: Competent authority
• Section: 37(1)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NOS. 273 & 274/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2009-10 & 10-11. M/S. BARODA RAJASTHAN KSHETRIYA GRAMIN BANK, PLOT NO. 2343, 2 ND FLOOR, VAISHALI NAGAR, AJMER. CUKE VS. THE DCIT, CIRCLE-1, AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACH 8963 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI AJAY SOMANI (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJ MEHRA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 02/08/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 03/08/2018 VKNS'K@ ORDER PER VIJAY PAL RAO, J.M. THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST TWO SEPARATE ORDERS OF LD. CIT (A), AJMER DATED 17.01.2018 AND 03.01.20 18 FOR THE ASSESSMENT YEARS 2009-10 AND 10-11 RESPECTIVELY. THE ASSESSEE HAS RA ISED THE COMMON GROUNDS IN THESE APPEALS. THE GROUND RAISED FOR THE ASSESSMEN T YEAR 2009-10 ARE AS UNDER :- 1. THAT THE LD. CIT (A), AJMER HAS ERRED IN LAW A ND THE FACTS OF THE CASE IN CONFIRMING THE UNNECESSARY ADDITIONS BY DIS ALLOWANCE OF INSURANCE PREMIUM PAID TO LIC REGARDING LEAVE ENCAS HMENT LIABILITY AND ENHANCEMENT TOTALING TO RS. 1,02,63,4 49/- (RS. 70,74,658 + RS. 31,88,791), THE SAME NEEDS TO BE DE LETED :- 2 ITA NOS. 273 & 274/JP/2018. BARODA RAJASTHAN KSHETRIYA GRAMIN BANK, AJMER. THAT THE DISALLOWANCE OF INSURANCE PREMIUM PAID TO LIC & OTHERS REGARDING LEAVE ENCASHMENT LIABILITY OF RS . 70,74,658/- IS BAD IN LAW AS THE EXPENDITURE IS ALL OWABLE UNDER SECTION 36/37. HONORABLE HIGH COURT, UTTARAKH AND IN ITA NO. 39 OF 2009 CIT VS. M/S. THE NAINITAL BAN K LIMITED & HONORABLE ITAT, DELHI IN HERO MOTO CORP L TD. VS. CIT (2013) 60 SDT 25 (DELHI) HAS ALLOWED SIMILA R CONTRIBUTION TO LIC AS DEDUCTIBLE EXPENDITURE. 2. THAT THE LD. CIT (A), AJMER HAS ERRED IN ENHANCE MENT OF ASSESSMENT BY AN INCOME OF RS. 31,88,791/- TREATING THE INTERNAL ACCRETIONS BY LIC & OTHERS TO OUR CONTRIBU TIONS REGARDING LEAVE ENCASHMENT LIABILITY, ASCERTAINED B Y ANNUAL ACTUARIAL VALUATION (WHICH IS ARRIVED BY DEDUCTING THE TILL DATE ACCRETIONS). THE SAME HAS NEITHER BEEN RECEIVED NOR ACCRUED TO THE APPELLANT. 2. THE SOLITARY COMMON ISSUE IN BOTH THE APPEALS PE RTAINS TO THE DISALLOWANCE OF INSURANCE PREMIUM PAID TO THE LIC REGARDING LEAVE E NCASHMENT LIABILITY. THE AO DISALLOWED THE CLAIM OF PREMIUM PAID BY THE ASSESSE E FOR LEAVE ENCASHMENT LIABILITY TO THE LIC ON THE GROUND THAT THE PAYMENT WAS NOT M ADE TO THE EMPLOYEES BUT IT WAS PAID TO THE INSURANCE COMPANY. ON APPEAL, THE LD. CIT (A) HAS CONFIRMED THE ORDER OF THE AO BY FOLLOWING THE ORDER IN THE ASSES SEES OWN CASE FOR THE ASSESSMENT YEAR 2014-15. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT THE TRIBUNAL FOR THE ASSESSMENT YEAR 2014-15 HAD ACCEPTED THE CLAIM OF T HE ASSESSEE ON PRINCIPLE THAT THE PREMIUM PAID TO THE LIC REGARDING THE LEAVE ENC ASHMENT LIABILITY IS AN ALLOWABLE CLAIM BY FOLLOWING THE EARLIER DECISION OF THE TRIB UNAL IN THE CASE OF JHALAWAR KENDRIYA SAHAKARI BANK LTD. VS. ACIT DATED 14.08.20 14 IN ITA NOS. 1032/JP/2011 AND 1051/JP/2011. HOWEVER, SINCE THERE WERE MORE T HAN ONE POLICY TAKEN BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2014-15 AND THE AM OUNT OF PREMIUM WAS ALSO 3 ITA NOS. 273 & 274/JP/2018. BARODA RAJASTHAN KSHETRIYA GRAMIN BANK, AJMER. MORE THAN RS. 14 CRORES, THEREFORE, THE TRIBUNAL RE MITTED THE MATTER TO THE AO FOR FRESH ADJUDICATION AFTER VERIFICATION OF THE FACTS. WHEREAS FOR THE ASSESSMENT YEARS 2009-10 AND 10-11 THE AMOUNT OF PREMIUM IS VERY SMA LL IN COMPARISON TO THE ASSESSMENT YEAR 2014-15 AND THE ENTIRE PREMIUM WAS PAID ONLY TO THE LIC. HENCE THE LD. A/R HAS SUBMITTED THAT THE CLAIM OF THE ASS ESSEE MAY BE ALLOWED BY FOLLOWING THE EARLIER DECISION OF THE TRIBUNAL IN THE CASE OF JHALAWAR KENDRIYA SAHAKARI BANK LTD. VS. ACIT (SUPRA). HE HAS FURTHER SUBMITTED TH AT THE REMANDING BACK OF THE ISSUE WOULD CAUSE A SERIOUS HARDSHIP TO THE ASSESSE E AS THE MONEY OF THE ASSESSEE WOULD REMAIN WITH THE DEPARTMENT AND THE ASSESSEE B EING A SMALL COOPERATIVE BANK WOULD LOSE THE INTEREST AT LEAST @ 6% AS THE DEPART MENT WOULD PAY ONLY 6% PER ANNUM INTEREST ON THE REFUND AS AGAINST THE COST OF THE FUND IS AROUND 12%. HENCE THE LD. A/R HAS SUBMITTED THAT THE CLAIM OF THE ASS ESSEE MAY BE ALLOWED. 3.1. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED T HAT THE LD. CIT (A) HAS FOLLOWED THE ORDER FOR THE ASSESSMENT YEAR 2014-15 AND THIS TRIBUNAL HAS ALREADY REMITTED THE ISSUE TO THE RECORD OF THE AO, THEREFO RE THE ISSUE MAY BE DECIDED IN TERMS OF THE EARLIER ORDER OF THE TRIBUNAL IN ASSES SEES OWN CASE. 4. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD, WE NOTE THAT AN IDENTICAL ISSUE WAS CONSIDE RED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2014-15 VIDE ORDER DATED 17.05.2018 IN ITA NO. 272/JP/2018 IN PARA 4.1 TO 4.3 AS UNDER :- 4.1 THE GROUND NO. 2 (II) OF THE ASSESSEE IS REGARD ING THE DISALLOWANCE OF INSURANCE PREMIUM PAID TO LIC AND OTHERS TOWARDS LE AVE ENCASHMENT LIABILITY OF RS. 34,19,23,944/- (RS. 35,19,00,000 LESS RS. 99,76,056 ). BRIEF FACTS OF THE CASE ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDING R EQUESTED THE ASSESSEE BANK TO 4 ITA NOS. 273 & 274/JP/2018. BARODA RAJASTHAN KSHETRIYA GRAMIN BANK, AJMER. FURNISH THE INFORMATION RELATING TO THE AMOUNT OF L EAVE ENCASHMENT AND CONFIRM AS TO WHETHER THE AMOUNT OF LEAVE ENCASHMENT SHOWN IN P&L A/C IS ACTUALLY PAID TO THE EMPLOYEES. IF THE SAME IS PAID TO THE EMPLOYEES THE N THE ASSESSEE BANK SHALL FURNISH THE DOCUMENTARY PROOF FOR THE SAME. THE ASSESSEE BA NK SUBMITTED REPLY OF THE ABOVE QUERY VIDE LETTER NO. 18028 DATED 29-12-2016 WHICH HAS BEEN CONSIDERED BY THE AO. HOWEVER, THE AO DID NOT FIND THE ASSESSEE B ANKS REPLY ACCEPTABLE ON THE FOLLOWING GROUNDS:- (I) IT IS SEEN THAT THE ASSESSEE BANK HAS BEEN CLAI MING THIS DEDUCTION ON THE BASIS OF INVESTMENT MADE FOR THIS PURPOSE WITH THE LIC, BAJAJ ALLIANZ, FUTURE GENERALI, AVIVA, HDFC, INDIA FIRST AND BIRLA . ANY PAYMENT FOR LEAVE ENCASHMENT IN FUTURE HAS TO BE MADE OUT OF THAT FUN D. HOWEVER, NO SUCH DEDUCTION IS ALLOWABLE UNDER ANY OF THE PROVISIONS OF THE INCOME TAX ACT AND DEDUCTION IF ANY HAS TO BE ALLOWED ONLY ON THE ACTUAL PAYMENT MADE TO THE EMPLOYEES. (II) THE CONTENTION OF THE ASSESSEE BANK WAS DULY C ONSIDERED BUT WAS NOT ACCEPTABLE FOR THE REASON THAT SECTION 37(1) PR OVIDES FOR THE ALLOWING OF ANY EXPENDITURE LAID OUT OR EXPENDED WHOLLY AND EXC LUSIVELY FOR THE PURPOSE OF THE BUSINESS. IT DOES NOT COVER ANY PROVISION MA DE FOR THE PURPOSE OF ANY FUTURE LIABILITY. (III) THE PROVISIONS MADE BY THE ASSESSEE FOR LEAV E ENCASHMENT EXPENSES (ALTHOUGH THE PAYMENT HAS BEEN MADE TO LIC ) IS NOT A PAYMENT TO EMPLOYEES AND AS SUCH THE EXPENSES ARE NOT ALLOWABL E UNDER THE PROVISIONS OF SECTION 43B(F) OF THE INCOME TAX ACT, 1961. THE CASE OF THE ASSESSEE IS CLEARLY HIT BY THE PROVISIONS OF SECTION 43B(F) OF THE ACT. AS THE ASSESSEE HAS NOT MADE ANY PAYMENT TO EMPLOYEES MORE PARTICULARLY IN VIEW OF THE PROVISIONS OF SECTION 43B(F) OF THE ACT, THE DEDUCT ION IN RESPECT OF EXPENSES CLAIMED BY THE ASSESSEE ON ACCOUNT OF PROVISIONS FO R LEAVE ENCASHMENT IS NOT ALLOWABLE TO THE ASSESSEE. (IV) MOREOVER THE ASSESSEE HAS NOT FURNISHED THE DO CUMENTARY PROOF THAT THE GROUP LEAVE ENCASHMENT FUND IS AN APPROVED FUND BY THE COMPETENT AUTHORITY. IN VIEW OF THE ABOVE REASONS , THE PROVISION MADE F OR THE LEAVE ENCASHMENT OF RS. 35,19,00,000/-IS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE BY THE AO. 4.2 IN FIRST APPEAL, THE LD. CIT(A) HAS CONFIRMED T HE ADDITION OF RS. 34,19,23,944/- BY OBSERVING AS UNDER:- 4.12..THE APPELLANT HAS ALSO RELIED UPON THE DE CISION OF ITAT JAIPUR IN THE CASE OF JHALAWAR KENDRIYA SAHAKARI BA NK. IN THIS CASE ALSO, THE RELIEF WAS ALLOWED TO THE APPELLANT ON TH E SUBMISSION MADE BY THE APPELLANT THAT AFTER CONTRIBUTION OF PREMI UM, THE APPELLANT HAS NO CONTROL OVER THE SAME. (PAGE NO 9 OF THE O RDER). THE 5 ITA NOS. 273 & 274/JP/2018. BARODA RAJASTHAN KSHETRIYA GRAMIN BANK, AJMER. TRIBUNAL ALSO RELIED UPON THE DECISION OF HON'BLE S UPREME COURT IN THE CASE OF TEXTOOL COMPANY LTD AND DECISION OF ITA T DELHI IN THE CASE OF THE NAINITAL BANK LIMITED. AS I HAVE ALREA DY DISCUSSED ABOVE THE FACTS OF TEXTOOL COMPAY LIMITED, ON WHICH THE D ECISION OF THE NAINITAL BANK LIMITED WAS BASED WERE TOTALLY DIFFER ENT FROM THE FACTS OF THE APPELLANTS CASE. THEREFORE, THE DECIS ION OF ITAT JAIPUR IS ALSO NOT APPLICABLE TO THE CASE OF THE APPELLANT BE CAUSE THE APPELLANT HAS ABSOLUTE CONTROL OVER THE FUNDS PARKE D WITH THESE COMPANIES AND THE EMPLOYEES DO NOT HAVE ANY CONTROL OVER THESE FUNDS. THE OTHER DECISION RELIED UPON BY THE APPELL ANT ARE NOT RELEVANT FOR DECIDING THE ALLOWABILITY OF DEDUCTION U/S 43B(F). I HAVE GONE THROUGH THE VARIOUS DECISIONS RELIED UPON BY T HE APPELLANT CAREFULLY. IN THE DECISION GIVEN BY THE ITAT DELHI H BENCH IN THE CASE OF THE NAINITAL BANK, THE AMOUNT PAID TO LIC O N ACCOUNT OF LEAVE ENCASHMENT WAS ALLOWED AS DEDUCTING RELYING O N THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT VS TEXTOOL COMPANY LTD (262 IKTR 257) AND THE DECISION IN THE CASE OF ASSO CIATED ELECTRICAL INDUSTRIES (INDIA) PVT. LTD. I HAVE GONE THROUGH TH E DECISION OF THE SUPREME COURT IN THE CASE OF TEXTOOL COMPANY LTD. C AREFULLY. THE ISSUE DECIDED BY THE HON'BLE SUPREME COURT IN THAT CASE WAS ADMISSIBILITY OF DEDUCTION OF THE PAYMENT MADE TO L IC TOWARDS GRATUITY FUND U/S 36(1)(V) OF THE I.T. ACT, 1961. T HE ISSUE OF ALLOWABILITY OF DEDUCTION U/S 43(B)(F) OF LEAVE ENC ASHMENT WAS NOT THERE BEFORE THE HON'BLE SUPREME COURT. THE HON'BLE SUPREME COURT ALLOWED THE CLAIM OF THE APPELLANT OBSERVING AS UNDER:- HAVING CONSIDERED THE MATTER IN THE LIGHT OF THE BACKGROUND FACTS, WE ARE OF THE OPINION THAT THERE IS NO MERIT IN THE APPEAL. TRUE THAT A FISCAL STATUTE IS TO BE CONSTRUED STRICTLY AND NOTH ING SHOULD BE ADDED OR SUBTRACTED TO THE LANGUAGE EMPLOYED IN THE SECTION, YET A STRICT CONSTRUCTION OF A PROVISION DOES NOT RULE OUT THE A PPLICATION OF THE PRINCIPLES OF REASONABLE CONSTRUCTION TO GIVE EFFEC T TO THE PURPOSE AND INTENTION OF ANY PARTICULAR PROVISION OF THE ACT (S EE: SHRI SAJJAN MILLS LTD. VS LD. CIT, M.P. & ANR.(1985) 156 ITR 585). FROM A BAR E READING OF SECTION 36(1)(V) OF THE ACT, IT IS MANIFEST THAT THE REAL I NTENTION BEHIND THE PROVISION IS THAT THE EMPLOYER SHOULD NOT HAVE ANY CONTROL OV ER THE FUNDS OF THE IRREVOCABLE TRUST CREATED EXCLUSIVELY FOR THE BENEF IT OF THE EMPLOYEES. IN THE INSTANT CASE, IT IS EVIDENT FROM THE FINDINGS RECOR DED BY THE COMMISSIONER AND AFFIRMED BY THE TRIBUNAL THAT THE ASSESSEE HAD ABSOLUTELY NO CONTROL OVER THE FUNDS CREATED BY THE LIC FOR THE BENEFIT OF THE EMPLOYEES OF THE ASSESSEE AND FURTHER AL THE CONTRIBUTION MADE BY TH E ASSESSEE IN THE SAID FUND ULTIMATELY CAME BACK TO THE TEXTOOL EMPLOYEES GRATUITY FUND, APPROVED BY THE COMMISSIONER WITH EFFECT FROM THE F OLLOWING PREVIOUS YEAR. THUS THE CONDITIONS STIPULATED IN SECTION 36(1)(V) OF THE ACT WERE SATISFIED. . THUS I AM OF THE OPINION THAT EVEN THE DECISION OF ASSOCIATED ELECTRICAL INDIA PVT. LTD IS ALSO NOT APPLICABLE IN THE CASE UNDER C ONSIDERATION. 6 ITA NOS. 273 & 274/JP/2018. BARODA RAJASTHAN KSHETRIYA GRAMIN BANK, AJMER. THE APPELLANT HAS ALSO RELIED UPON THE DECISION OF ITAT JAIPUR IN THE CASE OF JHALAWAR KENDRIYA SAHAKARI BANK. IN THIS CASE ALSO, THE RELIEF WAS ALLOWED TO THE APPELLANT ON THE SUBMISSION MADE BY THE APPELLANT T HAT AFTER CONTRIBUTION OF PREMIUM, THE APPELLANT HAS NO CONTROL OVER THE SAME (PAGE NO. 9 OF THE ORDER). THE TRIBUNAL ALSO RELIED UPON THE DECISION OF HON'B LE SUPREME COURT IN THE CASE OF TEXTOOL COMPANY LTD AND DECISION OF ITAT DELHI IN T HE CASE OF THE NAINITAL BANK LIMITED. AS I HAVE ALREADY DISCUSSED ABOVE THE FACT S OF TEXTOOL COMPANY LIMITED ON WHICH THE DECISION OF THE NAINITAL BANK LTD WAS BAS ED WERE TOTALLY DIFFERENT FROM THE FACTS OF THE APPELLANTS CASE. THEREFORE, THE DECIS ION OF ITAT JAIPUR IS ALSO NOT APPLICABLE TO THE CASE OF THE APPELLANT BECAUSE THE APPELLANT HAS ABSOLUTE CONTROL OVER THE FUNDS PARKED WITH THESE COMPANIES AND EMPL OYEES DO NOT HAVE ANY CONTROL OVER THESE FUNDS. THE OTHER DECISION RELIED UPON BY THE APPELLANT ARE NOT RELEVANT FOR DECIDING THE ALLOWABILITY OF DEDUCTION U/S 43B( F) 4.13 IT IS PERTINENT TO MENTION THAT IN THE A.Y. 2 009-10 AND 2010-11,THE APPELLANT ITSELF HAD SHOWN THE FUNDS PARKED WITH LI C AND OTHER COMPANIES FOR LEAVE ENCASHMENT AS INVESTMENT IN SCHEDULE II OF THE BALA NCE SHEET (RS. 4,35,91,748 AND RS. 5,77,16,828 AS ON 31-03-2009 AND 31-03-2010 RES PECTIVELY) IN THE A.Y. 2010-11, THE INTEREST ACCRUED ON SUCH FUNDS WAS CREDITED TO THE PROFIT & LOSS ACCOUNT UNDER THE HEAD OTHER INCOME. THEREFORE, I FIND NO JU STIFICATION FOR CLAIMING INVESTMENT OF SAME NATURE AS EXPENDITURE IN THE A.Y. 2014-15. 4.14 AS PER INFORMATION FURNISHED BY THE APPELLANT, THE ACTUAL AMOUNT PAID TOWARDS LEAVE ENCASHMENT TO EMPLOYEES THROUGH LIC W AS RS. 99,76,056/-, THEREFORE, IN VIEW OF THE DISCUSSION MADE ABOVE, THE DEDUCTION OF RS. 99,76,056/- IS HELD TO BE ALLOWABLE U/S 43B(F) BECAUSE THIS WAS THE SUM PAYAB LE AND ACTUALLY PAID BY THE ASSESSEE AS EMPLOYER IN LIEU OF ANY LEAVE AT THE CR EDIT OF HIS EMPLOYEE, AS SPECIFIED U/S 43B(F). ACCORDINGLY, OUT OF THE TOTAL DISALLOWA NCE OF RS. 35,19,00,000/- DISALLOWANCE OF RS. 99,76,056/- IS DELETED AND THE REMAINING DISALLOWANCE OF RS. 34,19,23,944/- (RS. 35,19,00,000 RS. 99,76,056) I S HEREBY CONFIRMED. 4.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. DURING THE COURSE OF HEARING, THE LD.AR OF THE ASSE SSEE DREW OUR ATTENTION TO THE DECISION OF ITAT JAIPUR BENCH IN THE CASE JHALAWAR KENDRIYA SAH AKARI BANK LTD VS ACIT (ITA NO.1032/JP/2011 AND ITA NO. 1051/JP/2011 IN THE CA SE OF ACIT VS JHALAWAR KENDRIYA SAHAKARI BANK LTD WHEREIN THE BENCH HAS ALLOWED THE BENEFIT OF GROUP LEAVE ENCASHMENT SCHEME TO THE BANK BY OBSERVING AS UNDER:- 19. APROPOS THE DEPARTMENTAL APPEAL, THE ASSESSEE TOOK A POLICY FROM LIC NAMED AS JHALWAR KENDRIYA SAHAKARI BANK EMPLOYE E GROUP LEAVE ENCASHMENT SCHEME. THE FACTS ARE MENTIONED IN DETAI L ABOVE. THE PAYMENT OF LEAVE ENCASHMENT IS A CONTRACTUAL LIABILITY8, A CHARGE ON ASSESSEE'S PROFIT. TO ENSURE TIMELY BENEFIT OF LEAVE ENCASHMENT OF EMP LOYEES SCHEME IS DEVISED BY THE LIC, WHICH WORKS OUT THE LEAVE ENCAS HMENT LIABILITY AND FIXATION OF PREMIUM. THE LIABILITY IS ASCERTAINED A ND CRYSTALLIZED ON A SCIENTIFIC METHOD BY THE LIC. THUS, THE ASSESSEE'S PAYMENT OF RS. 40 LACS TOWARDS THE SAME IS WITHIN THE FRAMEWORK OF THE SCH EME. IN OUR CONSIDERED VIEW, THE SAME IS ALLOWABLE DEDUCTION. THIS VIEW FU RTHER SUPPORTED BY THE HON'BLE SUPREME COURT IN THE CASE OF TEXTOOL CO. LT D (SUPRA) AND ITAT 7 ITA NOS. 273 & 274/JP/2018. BARODA RAJASTHAN KSHETRIYA GRAMIN BANK, AJMER. JUDGEMENT IN THE CASE OF NAINITAL BANK LTD (SUPRA). RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE ASSESSEE IS ELIGIBLE FOR THIS DEDUCTION. THE LD.AR OF THE ASSESSEE FURTHER SUBMITTED THAT TH E ASSESSEE HAS DISCHARGED ITS LIABILITY TOWARDS LEAVE ENCASHMENT SCHEME, THE SAME IS THEREFORE, ALLOWABLE AS EXPENDITURE U/S 37(1)OF THE ACT. TAKING INTO CONSID ERATION THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND THE DECISIONS RELIED UPON BY THE LD.AR OF THE ASSESSEE, IT WILL BE IN THE INTEREST OF EQUITY AND JUSTICE TO RESTORE THE ISSUE TO THE FILE OF THE AO FOR AFRESH ADJUDICATION. THE ASSESSEE IS DIRECTED T O SUBMIT THE WRITTEN SUBMISSION ALONGWITH RELEVANT DETAILS BEFORE THE AO. THUS GROU ND NO. 2(II) OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THUS THE TRIBUNAL AFTER CONSIDERING THE FACTUAL MAT RIX OF THE ISSUE REMITTED THE SAME TO THE RECORD OF THE AO FOR AFRESH ADJUDICATION AFT ER CONSIDERING THE RELEVANT DETAILS TO BE FILED BY THE ASSESSEE. HOWEVER, THE TRIBUNAL HAS ACCEPTED THE POSITION OF ALLOWABILITY OF THE CLAIM IF THE SAME IS REGARDING THE PREMIUM PAID FOR A POLICY TAKEN FROM THE LIC FOR EMPLOYEES GROUP LEAVE ENCASHMENT S CHEME. ACCORDINGLY, AS FAR AS THE ALLOWABILITY OF THE CLAIM FOR PAYMENT OF PRE MIUM OF POLICY TAKEN BY THE ASSESSEE FOR EMPLOYEES GROUP LEAVE ENCASHMENT SCHEM E, THE SAME IS ALLOWABLE EXPENDITURE. HOWEVER, SINCE THE LD. CIT (A) HAS POI NTED OUT THAT THE ASSESSEE ITSELF HAS SHOWN THE PAYMENT AS INVESTMENT IN THE LIC AND OTHER COMPANIES AND THE INTEREST ACCRUED ON SUCH FUND WAS CREDITED TO THE P ROFIT & LOSS ACCOUNT, THEREFORE, THE AO HAS TO JUST VERIFY THE FACT WHETHER ANY INCO ME ACCRUING ON THE POLICY TAKEN BY THE ASSESSEE WAS ACTUALLY RECEIVED BY THE ASSESS EE OR IT IS JUST AN ACCOUNTING TREATMENT BY THE ASSESSEE WITHOUT ACTUAL INCOME. F URTHER, IF THE BENEFIT ACCRUED ON THE POLICY IS ONLY ACCUMULATED TO THE FUND ITSELF W HICH IS TO BE USED FOR DISCHARGE OF LIABILITY ON ACCOUNT OF LEAVE ENCASHMENT, THEN SUCH INCOME THOUGH ASSESSEE HAS 8 ITA NOS. 273 & 274/JP/2018. BARODA RAJASTHAN KSHETRIYA GRAMIN BANK, AJMER. CREDITED IN THE PROFIT & LOSS ACCOUNT WOULD NOT PAR TAKE THE CHARACTER OF REAL INCOME BUT IT WOULD BE ONLY ACCUMULATION OF THE VALUE OF T HE POLICY TO BE USED FOR DISCHARGE OF THE LIABILITY ON ACCOUNT OF LEAVE ENCASHMENT. H ENCE, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE DIRECT THE AO TO VERIFY THESE FACTS AND THEN ALLOW THE CLAIM OF THE ASSESSEE IN THE ABOVE TERMS. 5. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 03/08/2 018. SD/- SD/- ( FOE FLAG ;KNO ) ( FOT; IKY JKWO (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 03/08/2018. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S. BARODA RAJASTHAN KSHETRIYA G RAMIN BANK, AJMER. 2. THE RESPONDENT THE DCIT, CIRCLE-1, AJMER. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 273 & 274/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 9 ITA NOS. 273 & 274/JP/2018. BARODA RAJASTHAN KSHETRIYA GRAMIN BANK, AJMER.